It is now widely accepted that ‘one size fits all’ is no longer relevant in the modern NHS and that key account management is the way forward. But how do companies and individuals need to change to make KAM a success? Management Consultant Joanna Allen explains.
Key Account Management has been widely recognised and successfully practiced in various sectors for many years, particularly the fast moving consumer goods (FMCG) industry. It is a business-to-business practice, which advocates that companies use a different strategy with customers they consider to be strategically important to their business. The whole crux of undertaking an account management strategy is to add value to both the customer and the organisation. The difficulty lies in measuring the value that is not wholly sales-based.
When adopting an account management approach, the offering to the customer needs to be streamlined and customised to meet the requirements of the individual, whilst establishing long-term relationships built on trust. It is not a quick fix but a long term commitment to change which may also go some way to bridge the trust gap in the relationship between the industry and the NHS that has emerged over many years.
The long-term approach
The NHS continues to change rapidly and industry needs to adapt to this change by placing the customer central to their strategic plans. However, not all customers are equal – if they were there would be no need for key account management. In the pharmaceutical industry for many years target customers and practices have been defined using various methods. Some of these include therapy class potential, demographic data, existing sales or account potential defined by practice or hospital size. In most cases this is a nationally dictated strategy with minimal input from representatives at a local level. Previously, with national targets and the old GP contract based on quantity not quality, this was an appropriate way to define target customers.
However, with the focus now on patient-centred care and the building of services around the patient, one central targeting strategy clearly does not fit all. The NHS has made major steps forward in recent years, standardising policies at a national level, whilst allowing for elements of this to be localised to fit the needs of population where it is being implemented. Also, at the same time, ensuring that standards are maintained and targets achieved. In this way, the Department of Health are able to view the NHS in a converged and diverged way at the same time. It is now time for the industry to adopt a similar view.
Figure 1: Structure of the NHS
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This change in the NHS has led the industry towards adopting an account management approach, as the need for flexibility in the dynamic world of the NHS has been recognised. This need has been greater enhanced by the change in the way drugs are purchased, as the decision-maker can be three to four times removed from the end user. The short-term sale approach to gain prescriptions is no longer viable, collaborative long-term relationships need to be formed, not just by individuals, but by organisations. Securing organisational relationships leaves the company less vulnerable to representatives leaving and taking the account with them. In building these relationships with the purchaser, opinion leader and prescriber most companies take a team approach, with several representatives and head office personnel involved with the account.
From the inside out
In itself, the team selling approach creates challenges, especially in managing the account plan and the cross-team communication. Teams can span territories, regions, managers, and even companies, further increasing the challenge and creating the need for comprehensive plans and co-ordination of the multiple communication channels that exist. Accountability and responsibility for these needs to lay with one person without this success will be difficult to achieve. In their work on customer-facing people and marketing departments, Christopher et al (1991) recognised that "relationships outside the organisation depend on the quality of relationships within it”.
One of the critical success factors, therefore, is the strengthening of internal relationships across all functions, sales and marketing especially, which is everyone’s responsibility. How often in the industry do we lay the blame at the doors of others? The marketers are often accused of not listening to sales people and sales people blamed for inappropriate use of materials or not executing the campaign as was originally planned. To effectively sell as a team we need to effectively function as a team, departments need to be working in harmony towards a common goal that everyone understands.
Pivotal to any organisation is the marketing function, which is central to identifying the requirements of the customer now and in the future and formulating plans to meet these needs. Traditionally the role of the sales function is to tactically deliver these plans to meet the identified customer needs, so in essence sales is a function of marketing. In recognising this interdependence and placing the customer as the sole focus of all that we do, internal relationships can be strengthened and the communication gap bridged.
Key Account Management recognises that customers need to be placed central to the planning process, creating challenges arising from the diversity of the customers and the wants of these. One issue for the industry is that products are researched and developed to meet unmet or already met clinical needs with little thought for the wants of the buyer or end user. The challenge for organisations is to market these products to meet the wants of the buyer in a localised way.
Remaining relevant
Key account management is a fundamental mind shift for the whole organisation. It is no longer about regional project champions at representative level feeding back and having input into marketing tactics, it is about local Key Account Managers and representatives influencing local marketing strategy. Whatever the selling role is, it is essential to identify how to influence what happens within your locality, both internally and externally. To do this you need to be aware of your local priorities and issues. Take time with your customers to understand what their problems are and what their individual wants are. The needs of the whole account will not differ much from customer to customer, but their wants will. This is where you can start to go beyond selling and be part of the solution and not the problem.
Identifying the wants of the individuals within an organisation will help you to best fit the resources that are available to you to plan to meet these needs or eliminate the account. True key account management is resource-heavy and is not a short-term process. There maybe some accounts where you are not able to meet the needs/wants of the customer and continuing to push your products is not the answer. Focusing your efforts on areas where synergies exist in order to pull the customer towards your product is. Defining your customers into these two groups will help you to prioritise your accounts.
Successfully implementation of a key account management strategy needs to be supported throughout the whole organisation. Key Account Managers need to be placed central to the account, taking overall responsibility for the business plan and central to all communications. They need to be empowered, working with autonomy whilst being accountable for their actions and co-ordinating the activities of others working within the account.
Flexibility in approach to accounts and market-specific materials are a key requirement to success. One size does not and will not fit all anymore, the NHS will only continue to evolve and the challenge for the industry is to remain relevant to the customer in their ever-evolving world. True competitive advantage is gained through the ability to be able to constantly and consistently innovate products and services. In the pharmaceutical industry we have little, if any, ability to influence product innovation. Our real power lies within our abilities to influence and innovate the service that we provide to our key strategic customers. Everyone possesses the ability to influence both internally and externally, use this to help you stay ahead of the game and gain the edge over your competitors.
Joanna Allen is a Management Consultant with 15 years industry experience, providing a range of tailored programmes to improve people performance. Joanna can be contacted at joanna@jostconsulting.co.uk.